Santiago calls for more teeth in UN tax treaty

Former Malaysian MP Charles Santiago, addressing a gathering of Asian nations, cautioned that inadequate provisions in the draft international tax treaty could impede Malaysia's capacity to gather tax revenue from multinational corporations. Speaking at the United Nations, Santiago advocated for more stringent obligations on countries to harmonize their existing tax treaties with the proposed UN tax convention. He proposed that countries should either abolish or renegotiate any treaties that conflict with the convention.

Santiago criticized the current requirement for countries to merely "take progressive and meaningful steps" towards aligning their tax agreements. "Malaysia cannot afford an international tax treaty that serves as merely an aspirational statement while existing, unequal tax treaties persist indefinitely," he argued. During the negotiations at UN headquarters in New York, Santiago emphasized that if Article 21 permits countries to delay implementation or maintain legacy tax arrangements indefinitely, developing economies like Malaysia would continue to forfeit crucial tax revenues necessary for public infrastructure, healthcare, education, and climate adaptation.

He further pointed out that the draft treaty lacked a set deadline for countries to align their tax treaties with the convention, only mandating a general obligation to take steps towards alignment. Santiago stressed that such an indefinite timeline would enable delay to be mistaken for reform. He called for an effective mechanism to handle countries that refuse to negotiate or prolong the process indefinitely.

Additionally, Santiago proposed that countries should be required to align their domestic laws with the convention to ensure its obligations are reflected in laws governing multinational companies.

Santiago represented an Asian peoples' movement focused on debt and globalization during the ongoing negotiations, which are set to conclude by August 13. The proposed UN Tax Convention seeks to boost global tax cooperation and establish a more inclusive and effective tax system, with a particular focus on benefiting developing countries.

Negotiations commenced in 2025 and are projected to continue until 2027, aiming to grant all countries, especially low- and middle-income nations, a platform to influence international tax rules and create a fair system that curbs tax evasion by multinational corporations and wealthy individuals.